The recent takeover of Anheuser-Busch by the Belgian company InBev has raised the usual set of fears about the alleged takeover of the American economy by foreigners. Perhaps it is because Anheuser-Busch produces iconic American brands, but the public reaction to the takeover exhibits the voter biases identified by Bryan Caplan in his 2007 book The Myth of the Rational Voter: anti-market bias, anti-foreign bias, make-work bias, and pessimistic bias. The transaction illustrates an important fact about private property rights in a market economy. Voluntary trades are just that: they are voluntary, and the parties to the transaction are under no special obligation to seek the approval of the rest of us.
Anti-market bias and anti-foreign bias are reflected in comments about the alleged shame of a Belgian company buying a very large, very visible American company. There are no legitimate ethical or economic reasons why we should care whether Anheuser-Busch is owned by Americans, Belgians, or, for that matter, Martians. Moreover, both InBev and Anheuser-Busch are publicly traded corporations with stock owned by shareholders around the world; in an increasingly global economy, the national origin of multinational corporations will diminish in importance.
The concern over how InBev’s acquisition of Anheuser-Busch will affect employment, particularly employment in Saint Louis, reflects what Caplan identifies as “make-work bias.” The point of economic activity, however, is not to provide employment but to produce goods and services. As economists like Steven Landsburg and Bryan Caplan have pointed out, jobs are not the benefit of prosperity. They are the cost of prosperity. It may cost some workers their jobs in the short run, but InBev’s acquisition better positions the new company to prosper in an increasingly competitive global marketplace.
Pessimistic bias manifests itself in the concern about the futures of those who may be thrown out of work by the transaction as well as how the acquisition allegedly serves as an example of American economic decline. Some people will undoubtedly lose their jobs, and I certainly do not mean to diminish the hardships this will cause for them and their families. At the same time, the resources that the new company saves will be available for re-employment elsewhere. Society can therefore enjoy more goods and services. Some scoff at the idea of sacrificing American jobs for cheaper beer, but in a world where billions of people have to meet their daily needs on less money than most Americans spend on a single meal, the savings from allowing companies the flexibility to adapt to changing market conditions can have an immeasurable impact on global poverty. The InBev/Anheuser-Busch deal is unlikely to have a considerable impact by itself, but it reflects the essence of the process that spreads prosperity.
Those who fear the collapse of American sovereignty in response to the InBev/Anheuser-Busch merger sometimes rely on the imagery of war and conquest to describe what they portray as an American defeat. The key difference between a corporate merger and military conquest, though, is important and clear. There are no signals akin to prices, profits, and losses by which we can determine whether political “transactions”–wars, for example–create value. This is not the case with economic transactions. The $70 per share price offered by InBev suggests that the company feels they can better satisfy consumer wants by combining the companies and rearranging their inputs, so much so that they were willing to pay a premium for Anheuser-Busch stock. InBev’s shareholders may very well be incorrect. Only time will tell, and time’s message will be crystal clear on the new company’s balance sheets and income statements.
A market economy operates through the voluntary exchange of private property rights. The transition will be difficult for some InBev and Anheuser-Busch stakeholders and these stakeholders can in turn create political difficulties for the new company. Under well-defined and well-enforced private property rights, however, the affected constituencies do not have the right (or the power) to veto the merger. Those who are adversely affected by the change should be helped during what could be a very difficult transition, but since economic changes in a market economy are determined by voluntary exchange of private property rights rather than the political process, firms and investors are able to make small, incremental changes that are part of the process by which wealth is created.
The conversation has also focused on how the merger will affect Anheuser-Busch’s status as a corporate citizen in Saint Louis. And indeed, the Anheuser-Busch presence is part of the character of the Saint Louis community. Some of my fondest memories of my time in graduate school in Saint Louis involved the Budweiser Brewery Tour, Grant’s Farm, and summer evenings at Busch Stadium. The price of progress is all too real, but one of the important characteristics of the market economy is that people can make plans and trade without having to worry about whether others approve. And that in itself is worth more than we can imagine.